Briefs: NZ deferral scheme ends, why the NZ Government acted on house prices

New Zealand’s mortgage deferral scheme has wound up, almost a year after it was introduced early in the COVID-19 pandemic. At its peak 54,000 people had about 80,000 mortgages on deferral, meaning it was supporting around 7 per cent of all mortgages. By the end of February there were around 3000 loans (a figure that also includes some business loans) still deferred, according to the NZ Bankers' Association, but the numbers on deferral have declined further through March.

CoreLogic's latest New Zealand house price stats (taking the temperature just before the Government's housing package announced on April 23) show annualised house price inflation running at over 30 per cent in Auckland, as well as in many regional centres. Across the whole country, the annual house price increase averaged out at 16.1 per cent - the highest rate since 2006.

CoreLogic says there is now clearer evidence - with first home buyers share in Auckland down to 23 per cent - that these "rampant gains are seeing more would-be first home buyers drop out of the market". It says the regulatory tweaks (which include a phasing out of interest deductibility for rental property investors and an extension of the bright-line test on taxing of landlord’s capital gains from properties owned for five years to ten years) will take the pressure off the RBNZ to introduce tough interest-only loan limits, but believes a mass pull-back by investors is unlikely.